Entrusting the economy to politicians or gold?

R. Leslie Deak, executive vice-president of Deak-Perera, the nation's "oldest , largest, and best-known foreign-currency-exchange and precious-metals firm," is a genuine, 24-carat "gold bug." He wants the United States to return to the gold standdard, pegging the volume and value of the dollar to national reserves of the yellow metal.

Gold bugs were a dying species a decade or so ago. But today's high inflation rate has produced ideal breeding conditions. Gold bugs are once again more numerous, though far from swarming like gypsy moth caterpillars here in the Northeast.

There tend to be numerous gold bugs among the conservative supporters of President Reagan. That may explain why this week the Treasury appointed a "gold commission" of 17 members, most of them government officials, "to assess the role of gold in the domestic and international monetary systems."

The makeup of the commission, which includes many economists with known moderate positions, suggests that this body will not recommend any radical changes for the role of gold in the economic system.

If so, it will disappoint Mr. Deak, who is the son of Nicholas L. Deak, founder of Deak-Perera. The junior Deak was in Boston to open another office for his firm, which already has some 75 around the world, trading more than $4 billion annually in 120 foreign currencies and precious currencies. It's growing business, and Deak-Perera added seven new offices last year and expects to do about the same this year.

Mr. Deak says he was a "typical college radical" until he started working and seeing now much of chunk the government took from his paycheck. Then he became a gold bug.

But there's another reason Mr. Deak is a gold bug, one that's a common factor among this species: The bugs do not trust the government to behave properly in regard to monetary policy. They reckon that public pressure for government spending is so great that elected politicians will oblige eventually by running up huge budget deficits and printing too much money to cover those deficits.

"There is no incentive to exercise constraint as a politician," Mr. Deak said.

Those who aren't gold bugs, who believe in the manageability of money without its being tied tightly to a commodity like gold, have greater faith in the ability of the public, the politicians, and central bankers to learn from past inflationary mistakes and practice a strict monetary policy. They believe in the possibility of man's economic redemption. Gold bugs regard man as an incurable economic sinner.

so, the gold bugs argue, peg the dollar to gold. "I can't think of any faster way to get those people [politicians] to stop spending money," Mr. Deak said. "Gold is a store of value they can't manipulate."

He offers the usual litany of economic dangers listed by those who believe this nation is headed for runaway inflation. There is the regular federal debt of about $1 trillion, plus another $200 billion in offbudget borrowing. There are social security future obligations of more than $9 trillion, plus huge unfunded corporate pension fund obligations.

To top it off, the federal government's deficit will still run more than $33 billion despite President Reagan's efforts to cut federal spending, he went on.

"The government has to keep printing money to keep paying off all those debts of the past," he said. Even though the budget cuts aren't even through Congress yet, consumers, businessmen, and others are "already starting to scream for mercy."

He added: "I only hope that Reagan and his team and the people of Congress will have the fortitude to stand up to the hurricane their policies will unleash." Even if they do, and he doubts that, Mr. Deak expects the public wrath over lost benefits to unseat President Reagan and the Republicans at the next presidential election. So he wants the gold standard as economic insurance against bad policy.

Now, critics of the gold standard maintain that when it was in effect earlier this century and last century, the US had worse booms and busts than it has had in these postwar decades. The discovery of major gold fields would boost the supply of gold rapidly, causing a boom. Or a shortage of gold might cause a depression.

Eugene A. Birnbaum, chief economic adviser of the Securities Groups, New York , maintains the busts were due more to widespread bank failures which would not be repeated nowadays with the creation of the Federal Reserve System. This well-known and respected economist is a gold bug, too. He admits that the return to a gold standard could face some difficulties such as choosing an appropriate price for the dollar-gold conversion rate.

Whatever the technical difficulties, the gold standard question still boils down to trust -- do you trust the public and the government to accept the necessary discipline behind a noninflationary economy or do you not?

Several factors today offer some reason for trust. One is the public's annoyance with inflation. It probably cost President Carter his job and brought into power the first administration yet with key posts held by keen "monetarists" -- people who believe in the importance of keeping money growth under strict control. This administration is backing the Fed's stern monetary policy wholeheartedly, a Fed that itself has gradually learned more about the importance of money.

So it may yet be proved that man is capable of running his economic affairs sensibly and responsibly without a golden prop.